After LG: Samsung next to stop TV production in Thailand

In another blow to Thailand’s battered economy, South Korean electronics giant Samsung said on May 21 that it has ceased to produce television sets in Thailand at the end of the first quarter. The decision has been made in the wake of Samsung’s new global strategy of streamlining its international operations and make them “more efficient” as a whole, according to a company spokeswoman commenting from Samsung’s headquarters in Seoul.

The company will still produce less complex appliances such as washing machines, fridges and air condition units in Thailand, the spokeswoman added.

Some observers suggest that Samsung is moving the Thai television production to Vietnam where labour costs for industrial workers are two-thirds of the wages in Thailand and where Samsung last year invested $560 million in production facilities in southern Vietnam. However, the spokesperson did not confirm such a move.

In addition to television sets, Samsung reportedly also plans to produce smartphones and displays in Vietnam, additionally benefiting from closer proximity to Chinese-based suppliers.

Samsung is the second electronics company to decrease production volume in Thailand in the recent past. In April this year, the last batch of television sets exited the production line at LG Electronics’ plant in Thailand’s Rayong province southeast of Bangkok. LG moved the production 1,500 kilometers northeast to the Vietnamese coastal city of Hai Phong.

Economist see the development as a continued downward trend for Thailand’s once-booming electronics industry that missed to adapt to changing technologies and to find a foothold in the global supply chain for more complex electronics such as tablets or smartphones, whose production moves increasingly to Vietnam and Indonesia, while development centers are being set up in Malaysia’s electronics hub of Penang.

Electronics are still Thailand’s most important export products, but as per January 2015 the country’s manufacturing index fell for the 22nd consecutive month, and production of goods like televisions and radios were down 38 per cent year-on-year.

While the current political environment is certainly not helpful for foreign investors and the economic policy of the military-led government is clearly suffering from a lack of competence, industry experts identify the problem of an eroding electronics industry in Thailand as a structural and not just a temporary one, with economic decision makers in Thailand failing to adapt to new developments and to increase competitiveness by attracting high-tech investors and generally showing a low readiness for innovations. A dismal education system that doesn’t produce enough specialists, let alone researchers and developers, is adding to the problem.

While Microsoft, Canon and Intel have all set up facilities in Vietnam the last few years, Foxconn announced to invest $1 billion in electronics production in Indonesia, including for the iPhone, and Nikon even set up a new camera production facility in Laos, such success stories from Thailand have become increasingly rare.

In another blow to Thailand’s battered economy, South Korean electronics giant Samsung said on May 21 that it has ceased to produce television sets in Thailand at the end of the first quarter. The decision has been made in the wake of Samsung’s new global strategy of streamlining its international operations and make them “more efficient” as a whole, according to a company spokeswoman commenting from Samsung’s headquarters in Seoul.

The company will still produce less complex appliances such as washing machines, fridges and air condition units in Thailand, the spokeswoman added.

Some observers suggest that Samsung is moving the Thai television production to Vietnam where labour costs for industrial workers are two-thirds of the wages in Thailand and where Samsung last year invested $560 million in production facilities in southern Vietnam. However, the spokesperson did not confirm such a move.

In addition to television sets, Samsung reportedly also plans to produce smartphones and displays in Vietnam, additionally benefiting from closer proximity to Chinese-based suppliers.

Samsung is the second electronics company to decrease production volume in Thailand in the recent past. In April this year, the last batch of television sets exited the production line at LG Electronics’ plant in Thailand’s Rayong province southeast of Bangkok. LG moved the production 1,500 kilometers northeast to the Vietnamese coastal city of Hai Phong.

Economist see the development as a continued downward trend for Thailand’s once-booming electronics industry that missed to adapt to changing technologies and to find a foothold in the global supply chain for more complex electronics such as tablets or smartphones, whose production moves increasingly to Vietnam and Indonesia, while development centers are being set up in Malaysia’s electronics hub of Penang.

Electronics are still Thailand’s most important export products, but as per January 2015 the country’s manufacturing index fell for the 22nd consecutive month, and production of goods like televisions and radios were down 38 per cent year-on-year.

While the current political environment is certainly not helpful for foreign investors and the economic policy of the military-led government is clearly suffering from a lack of competence, industry experts identify the problem of an eroding electronics industry in Thailand as a structural and not just a temporary one, with economic decision makers in Thailand failing to adapt to new developments and to increase competitiveness by attracting high-tech investors and generally showing a low readiness for innovations. A dismal education system that doesn’t produce enough specialists, let alone researchers and developers, is adding to the problem.

While Microsoft, Canon and Intel have all set up facilities in Vietnam the last few years, Foxconn announced to invest $1 billion in electronics production in Indonesia, including for the iPhone, and Nikon even set up a new camera production facility in Laos, such success stories from Thailand have become increasingly rare.